The Government’s $3.6 billion Welfare to Work package recognises that every Australian of working age has the right, and deserves the opportunity, to participate in the nation’s prosperity.

The best way for people to do this is by having a job and engaging in the economic and social life of our nation.

The economic record of the last decade is an impressive one. Australia’s prosperity is no accident. Unemployment has been reduced to 5.1% and due to the creation of more than 1.7 million new jobs, employment is at a record high with more than 7 millionAustralians in full time work.

The spectre of unemployment has given away in many places to labour shortages, especially of skilled labour. The unemployment queues of the early 1990s have diminished, but the ranks of the disabled pensioners and sole parent beneficiaries have grown rapidly. Too many children still grow up in jobless households.

At a time of sustained economic growth and unemployment at 29 year lows, it is unacceptable to have 2.5 million or 20% of working age Australians on income support. Of these, more than 1.3 million people are in receipt Parenting Payment or the Disability Support Pension and have few, if any, participation requirements.

It is also unacceptable to have 700,000 children growing up in jobless households, in which 2 or 3 generations of Australians may not know what it is like to have a job, let alone steady employment and regular income.

No one denies the fact that a government must preserve a well-targeted social safety net, while at the same time encouraging working-age people to find jobs and remain employed. These welfare reforms demonstrate the government’s strong commitment to this principle.

At the same time, people on welfare deserve more support and it is vital for Australia’s continuing prosperity that they be given every assistance and opportunity in which to achieve better outcomes.

Increasing economic participation

The bill meets with community standards about the need for a balance of assistance, incentives and obligations to increase participation and reduce welfare dependence amongst working age Australians.

Moving from welfare to work helps people achieve higher incomes and a better standard of living, participate in mainstream social and economic life and achieve a better future for their families. It also reduces the obligation on taxpayers, creating a positive cycle of work, higher incomes and more sustainable and better targeted welfare expenditure.

At a cost of $3.2 billion, the Welfare to Work measures covered by this bill focus on assisting parents, people with disabilities, the mature aged and the very long term unemployed.

This bill will respond to our twin challenges; the imperatives to increase participation for these groups and reduce their level and incidence of welfare dependence.

Newstart Allowance will be enhanced, additional employment assistance will be provided, compliance arrangements will be improved to encourage and reward participation and job seekers will be able to connect more quickly with the workforce through RapidConnect.

Parents—availability to work

Parents out of the workforce for long periods of time are in danger of losing the skills and self confidence necessary for them to return to work. Single parents spend around 12 years on average on income support. It is not surprising that some parents find it difficult to transfer back into work after extended periods out of the labour force.

Under the measures the core requirement for principal carer parents on income support payments will be to look for part-time work, if they have the capacity and availability to do so, generally when their youngest child turns six and is ready for school.

If they are unable to find work they will continue to keep their income support. In many cases parents meeting their requirements through part-time work will retain part rate income support.

These reforms are in line with community expectations and are modest by international standards.

From 1 July 2006 new applicants will be eligible for Parenting Payment Single when their youngest child is aged less than 8. For Parenting Payment Partnered applicants this will apply when their youngest child is less than 6. Once their youngest child either turns 6 (for Parenting Payment Partnered recipients) or turns 8 (for Parenting Payment Single recipients) they will typically go on to Newstart. Single principal carer parents in receipt of Newstart Allowance will also have access to the Pensioner Concession Card, the Pharmaceutical Allowance and the Telephone Allowance.

Principal carers on Newstart or Youth Allowance (Other than full-time students or new apprentices) will have a requirement to look for paid work of 15 hours a week or more. Parents qualifying for Parenting Payment Single from 1 July 2006 will have a job search requirement when their youngest child turns 6.

Parents on Parenting Payment Single or Partnered on 30 June 2006 can stay on that payment, under current eligibility provisions, until their youngest child turns 16. However, they will have a job search requirement from the latter of 1 July 2007 or when their youngest child turns 7.

The Australian Government has no intention of placing requirements on parents that could inhibit their ability to care for their children. Parents’ individual circumstances will be taken into account when determining their participation requirements.

Special family circumstances

The Government also recognises that some principal carer parents—for example registered and active foster carers, distance educators, and home schoolers, or who have large families or a disabled child—may be unavailable for work because of the need to focus fully on their caring responsibilities.

If a parent has special family circumstances such as these, they will be taken into account when determining their participation requirements under the Welfare to Work changes, and the parent may be eligible for a temporary exemption.

Circumstances where the parent has multiple caring responsibilities or cannot find suitable child care will also be taken into consideration.

Income supplement

All principal carer parents who are registered and active foster carers, home educators or distance educators will be exempt from participation requirements for a period of up to 12 months at a time and will receive a new rate that tops up their income support payment to the equivalent of the Parenting Payment Single rate. This applies for the period of the exemption and is reviewable.

The new rate will be indexed from 1 July 2006 so that it will continue to cover any difference between Parenting Payment Single and Newstart Allowance.

To support these changes, from 1 July 2006, more parents who have children with very challenging physical, intellectual, psychological or behavioural disabilities, will qualify for an expanded Carer Payment. This will be provided for in a separate Bill.

Victims of domestic violence

Principal carer parents who are subject to family breakdown associated with domestic violence will be temporarily exempted from participation requirements. Others who have been subjected to domestic violence will be temporarily exempted from participation requirements under current, more general, exemption provisions.

Additionally, principal carer parents who have undergone a highly stressful family breakdown may be eligible for a period of stabilisation before participation requirements commence. This will give them time to adjust before looking for work.

Improved child care provisions will assist parents returning to the workforce. The measures will provide the additional outside school hours child care necessary to reduce barriers parents face in moving from welfare to work, as well as addressing the current high demand for places. Principal carer parents with part-time work requirements will not be expected to take up work if it occurs outside school hours and no suitable child care is available, or the cost of care would result in a very low or negative financial gain from working.

The Government recognises that some parents may have barriers to overcome as they enter or re-enter the workforce and is committed to providing assistance to those with obligations to seek work and will provide additional employment focussed services to help jobless parents find work.

Extra Employment Services

A new Employment Preparation service will be available through Job Network to assist parents with school age children to find work and overcome barriers to employment by equipping them with skills to re-enter the workforce.

The Government will also provide additional employment related services to parents with special needs. Parents who have significant non-vocational barriers, such as substance abuse or homelessness, to overcome before looking for work will be referred to the Personal Support Programme.

Parents with a part-time requirement who are not working may be required to undertake an annual Mutual Obligation activity, including part-time Work for the Dole.

People with a disability—capacity to work

The Government is committed to maintaining a sustainable and adequate safety net for people with disabilities who are unable to work. At the same time, the Government believes long-term dependence on the Disability Support Pension is not the best option for people who have the ability to work reasonable hours, without ongoing support, in the open labour market.

Australian Government spending on the Disability Support Pension alone will exceed $8 billion in 2004/05. In 1980, 2.3% of working-age people were claiming the Disability Support Pension (DSP). By June 2005 this proportion had more than doubled to over 5% or 705,000 people.

Only around 10 per cent of DSP recipients are in the paid workforce in Australia while the average among OECD countries is around 30 per cent. The changes to income support arrangements and the increased funding for employment services and the Workplace Modifications Scheme are designed to encourage and assist people with disabilities to test their capacity to work.

From 1 July 2006 the focus will shift to the capacity people have to work—not their incapacity or their inability to work. If people with a disability have the capacity to work between 15 and up to 30 hours per week, without ongoing support in the open labour market then they will not be eligible to claim the Disability Support Pension. They will need to apply for another payment, typically Newstart or Youth Allowance (Other) and will be required to look for work. A person’s work capacity will be assessed by the new Comprehensive Work Capacity Assessment service. People who were receiving the Disability Support Pension on 10 May 2005 will not be affected by these changes.

Access to other benefits and support

People with disabilities will have access to the full range of vocational and pre-vocational programmes to help them with job preparation and job search activities. Places in vocational rehabilitation and employment services will be guaranteed for Newstart and Youth Allowance (Other) recipients with disabilities who have part-time work capacity.

These people will also get the Pensioner Concession Card, Pharmaceutical Allowance, the Telephone Allowance and other concessions available to card holders. Job seekers with a disability and a part-time requirement will also be eligible for a $312 Employment Entry Payment.

Mobility Allowance will be increased to $100 per fortnight for people on Newstart Allowance or Youth Allowance (other) with an assessed work capacity of at least 15 hours per week and for those people on the Disability Support Pension being assisted by an employment services provider. If these people increase their hours of work and move off income support and continue to work, they will retain eligibility for this Mobility Allowance.

People with disabilities and a part-time requirement who are not working may also be required to undertake an annual Mutual Obligation activity, including part-time Work for the Dole.

Mature age job seekers

Although the participation rate in the labour market has been rising steadily among mature age Australians, too many mature age people often experience difficulties finding work.

Newstart recipients aged 50 to 64 will be required to seek full-time work—the same requirements applying to younger job seekers. People aged 60 or over will not be required to participate in Work for the Dole. Nor will people aged 50 or over unless they are not genuine in their effort to find work. However, job seekers aged 55 or over will be able to fully meet their activity requirements through part-time work and/or voluntary work totalling at least 15 hours a week.

Mature age job seekers will be supported by increased employment assistance. They will also benefit from the new Employment Preparation service, which will be able to assist mature age people to update their skills and prepare them for the modern labour market.

Getting the very long term unemployed back into work

The Welfare to Work measures will also increase the assistance currently provided under the Job Network Active Participation Model to very long-term unemployment benefit recipients.

The new Wage Assist measure will provide additional incentives to employers to take on very long term unemployed job seekers into full-time, ongoing employment.

To help develop the work habits needed to enter the labour market job seekers who are not genuine in their efforts to find work may be required to participate in full-time Work for the Dole for 25 hours per week.

Very long term unemployed job seekers with major employment barriers can also be referred to a Comprehensive Work Capacity Assessment to identify if another payment, such as the Disability Support Pension, or a specialist programme such as vocational rehabilitation or disability open employment services, is appropriate.

More generous taper rates for Newstart Allowance

Many people moving from welfare to work, or increasing their earnings, will benefit from the enhanced allowance income test to be introduced under this bill.

Under the current Newstart personal income test, there is no payment reduction for the first $62 of income per fortnight, payment is reduced by 50 cents in the dollar for income between $62 and $142 per fortnight, and 70 cents in the dollar thereafter.

The new income test is more generous. The $62 per fortnight free area is unchanged, but the income range over which the 50 cents in the dollar reduction applies will be increased from $142 to $250 per fortnight, with payment being reduced by 60 cents in the dollar thereafter. The rate at which someone’s income affects their partner’s allowance has also been reduced from 70 cents in the dollar to 60 cents in the dollar. These changes will improve rewards from part-time work and help people move from welfare to work.

Youth Allowance (other than full-time students or new apprentices), Widow Allowance, Partner Allowance, Mature Age Allowance and Sickness Allowance will also be changed in line with the changes for Newstart Allowance.

A fair but firm compliance regime

This bill abolishes the current breaching regime, under which job seekers can incur long-lasting financial penalties regardless of any subsequent efforts to meet their requirements.

The new compliance framework included in this bill will more clearly link participation to payment and will reward those who are willing to re-engage quickly. A job seeker without a record of repeated non-compliance who commits a participation failure, such as missing an interview with an employment service provider, will be given the opportunity to avoid any financial penalty by quickly re-engaging with that provider.

Job seekers who persist with their non-compliance, despite being warned, will lose their payments. As a deterrent to repeated participation failures or more serious failures, such as refusing a job offer, an eight week non-payment period will apply. This bill also introduces a more equitable means of deterring income support recipients from deliberately failing to declare or under-declare their earnings, in the form of a recovery fee set at 10 per cent of the debt incurred.

There will be special arrangements for vulnerable people, such as dependent children, under the new compliance framework, including case management and limited financial assistance where vulnerable people and third parties may be unduly affected by non-payment periods. Vulnerable clients, such as people with intellectual disabilities, will also be clearly flagged so that their circumstances are taken into account in cases of non-compliance.

Current legislative safeguards relating to the imposition of penalties, such as the need for requirements to be reasonable and the need to consider a job seeker’s reasons for non-compliance, will continue to apply for both vulnerable and non-vulnerable job seekers. In addition, the current review and appeals system will be retained. This allows any job seeker to ask Centrelink to review any adverse decision and, if not satisfied with the outcome of the review, to appeal the matter to an external tribunal.

Work First approach

RapidConnect is a ‘work first’ approach designed to provide assistance to job seekers as soon as possible. Connecting job seekers to their Job Network member quickly should reduce frictional unemployment and improve job seekers’ chances of finding a job.

Under RapidConnect, a job seeker who contacts Centrelink to enquire about Newstart or Youth Allowance will be referred directly to Job Network. Job seekers who do not connect with their Job Network member may experience an impact on their income support. This ‘work first’ approach is at the cornerstone of the Government’s welfare to work reforms.

Conclusion

The Government firmly believes that the best form of welfare is a job. As Tony Blair, the current Prime Minister of the United Kingdom, has said, “Fairness starts with the chance of a job”.

I note that there has been little support from the Opposition for the Government’s reforms. They refuse to acknowledge that people on welfare have the same aspirations as other Australians.

The Opposition will claim that they support the notion that it is important to assist unemployed people into work, however they do not support the movement of people from pensions to unemployment benefits which contain mutual obligation requirements.

The challenge of implementing welfare reform is to get the right balance between obligations and support. This must be accompanied by appropriate incentives and support mechanisms to ensure that job seekers continue to be provided with services. The Government believes that its reforms strike this balance.

The majority of Australians would agree that it is not unreasonable to expect those people who are available and capable of work to participate in the workforce. The economic and social arguments for such reform are both compelling and necessary.

With this legislation, we face important choices: the choice between accepting growing numbers of people on welfare or doing something to help them get a job; the choice between recognising people’s abilities and capacities or continuing to focus on their disabilities and incapacities; the choice between tackling unemployment, or accepting joblessness as the cost of modern society; the choice between the dignity and value that comes from participation in the workforce or the despair and poverty that results from long term welfare.

The Government has made its choice to pursue the necessary reforms responsibly, mindful that these measures are directed at securing the future prosperity of Australia, and providing the opportunity for all Australians to participate in that prosperity.

This bill amends the Family Assistance Act and the Family Assistance Administration Act as part of the Government’s Welfare to Work package of measures to support more Australians to move from welfare to work.

The bill contains two child care related measures.

The number of hours of child care benefit a family will be eligible to receive in a week for each child in approved child care, without meeting the work, training, study test, will be increased by 4 hours, from 20 to 24 hours a week. This measure is included in Schedule 1.

Increasing the threshold limit of hours for which a family can receive child care benefit will assist parents in maintaining on-going lower levels of workforce participation and help their transition to a greater level of participation once their children are older. It also recognises that child care requirements often exceed actual working hours.

Schedule 2 gives effect to the second measure, which modifies the work, training, study test applicable to those who wish to claim child care benefit for up to 50 hours’ care in a week. To be eligible for up to 50 hours of child care benefit for a week for each child in approved child care, claimants and their partners who have work or work related commitments, or training or study commitments, will be required to demonstrate that they have engaged in these activities for at least 15 hours in that week or for at least 30 hours in a fortnight that includes that week.

This measure ensures that the greatest support is directed to those families with higher levels of work-related participation.

Both measures contained in this bill will apply from 3 July 2006 and demonstrate the Government’s commitment to supporting the child care needs of parents in work, training and study.

Ordered that further consideration of the bills be adjourned to the first day of the next period of sittings, in accordance with standing order 111.